MELBOURNE, AUSTRALIA / RankWire.AI / – Australia’s main electricity market faces a sharp rise in power demand as data centre development accelerates. The Australian Energy Market Operator says 225 data centre projects now sit in the connection pipeline. That compares with 97 projects one year earlier. About 165 data centres already operate across the National Electricity Market. Their electricity use currently stands near 5 terawatt hours a year, equal to about 3% of market consumption.
AEMO expects data centre electricity use to climb to about 34 TWh by 2035-36. That would lift the sector’s share of National Electricity Market consumption to around 13%. The operator’s high-growth scenario puts data centre demand near 52 TWh over the same period. The National Electricity Market covers eastern and southern Australia. It does not include Western Australia or the Northern Territory. The latest figures show how quickly large computing facilities have become a significant source of new grid demand.
Total electricity consumption across the market will also increase substantially during the next decade. AEMO forecasts annual use rising from about 176 TWh in 2025-26 to roughly 250 TWh in 2035-36. That represents growth of more than 40%. Data centres form one part of the increase alongside greater electrification across households, industry and businesses. The projected 34 TWh of data centre demand approaches the electricity now consumed by households across New South Wales and Victoria combined.
Data centres add pressure as older generation exits
Australia’s electricity system must absorb that growth while scheduled plant closures reduce existing supply. About 15 gigawatts of coal and gas generation will retire over the next decade. New generation and storage are also entering the system. Around 9.1 GW of new capacity connected during 2025-26, setting a record for annual additions. AEMO also lists roughly 40 GW of committed and anticipated generation and storage projects for delivery by the early 2030s.
The latest reliability assessment shows no forecast reliability gaps before 2030 under AEMO’s central outlook. The operator links that result to stronger investment in generation, storage and transmission. It also stresses the need for projects to arrive on schedule as older power stations close. Reliability gaps serve as planning signals when projected supply may fall below the required standard. They do not represent forecasts of blackouts. AEMO continues to track demand growth alongside the changing mix of generation across the market.
Government framework addresses energy and grid costs
The federal government has proposed national standards for large data centres covering electricity supply, grid costs and water use. The framework would require major facilities to support new power supply and cover their share of connection costs. It would also require large operators to reduce consumption when needed to support grid stability. The proposed standards include measures aimed at improving water efficiency. The government has targeted legislation for early 2027 as data centre electricity demand becomes a larger part of national energy planning.
The Australian Energy Market Commission has also recommended new requirements for large data centres connecting to the grid. Its proposals call for new clean, firmed electricity supply and greater flexibility in power consumption. The commission also addressed market registration, infrastructure costs and the impact of large new loads on existing consumers. Those recommendations accompany AEMO’s updated demand outlook. Together, the official assessments show a data centre pipeline that has more than doubled while electricity use across Australia’s main power market continues to rise.